Feb. 5 (Bloomberg) -- Gagfah SA, the third-biggest owner of
German real estate by market value, abandoned a plan to sell a
unit that owns a quarter of its homes as the company nears an
agreement on refinancing a 1 billion-euro ($1.35-billion) loan.

Gagfah, controlled by Fortress Investment Group LLC, will
keep 38,000 Dresden apartments that it bought in 2006 using the
loan, the company said in a statement today. The refinancing is
expected to close “within the next few weeks,” it said.

The deal will be a “significant step towards resolving our
2013 debt maturities,” Chief Executive Officer Stephen Charlton
said in the statement.

The loan matures in May and the company, based in
Luxembourg, has to pay back 2.1 billion euros in August from a
separate borrowing. Fortress is among the private-equity firms
facing debt deadlines after buying German real estate with the
cheap credit available in the years before the global financial
crisis. The New York-based firm owns 66 percent of Gagfah,
according to data compiled by Bloomberg.

Gagfah rose as much as 2 percent to 9.34 euros in Frankfurt
trading. The shares have gained 131 percent in the past 12
months, making it the best performer on Germany’s MDAX index for
medium-sized companies, which has risen 21 percent.

Woba Unit

Gagfah’s Dresden homes, valued at about 1.8 billion euros
in its third-quarter earnings report, account for about 25
percent of its holdings. Offers for the properties, which are
part of Gagfah’s Dresden Woba unit, came in at about where
they’re valued, according to the statement.

“Refinancing is the better alternative in spite of
attractive bids for the Woba portfolio,” Charlton said.

Two people with knowledge of the matter said last month
that Gagfah was on the verge of refinancing the loan, with most
of the funding coming from Bank of America Corp.

Deutsche Annington Immobilien AG, the German property
company owned by Terra Firma Capital Partners Ltd., received
court approval in December to restructure 3.8 billion euros of
debt coming due in July. The commercial mortgage-backed security
was valued at 5.8 billion euros when it was issued in 2006,
making it Europe’s biggest corporate CMBS.